Elizabeth Warren Proposes “Fundamental changes” to American Capitalism
Senator Elizabeth Warren has introduced a package of bills designed to reshape American capitalism and to remove the influence of money in politics. The Accountable Capitalism Act seeks to place regulations on the country’s most profitable corporations to make them accountable to a broad range of stakeholders. The Anti-Corruption and Public Integrity Act places restrictions on lobbying and requires the president, vice president, and federal lawmakers to release their tax returns annually while campaigning for and holding office. While these bills stand little chance of passing in the Republican-controlled Congress, many are viewing these measures as Warren’s attempt to stake out her policy positions prior to a possible 2020 presidential campaign.
The Accountable Capitalism Act would require corporations with more than $1 billion in annual revenue to obtain a new federal corporate charter. This charter would mandate that these corporations consider the impact of their decisions on all stakeholders including workers and their communities, while also requiring that 40% of the directors on corporate boards be elected by the workers. This bill is designed to combat the trend of income inequality and to increase worker and community involvement in corporate decisions.
Supporters of the Accountable Capitalism Act point to Germany’s “co-determination” system,” with its worker councils as a model for stakeholder contributions to business. However, these individuals fail to consider the stagnating effects on corporate decision making produced by the varied interests of these stakeholders. Even the plan’s supporters, such as Vox’s Matthew Yglesias acknowledge that it could cause stock prices to fall by up to 25 percent, however, they claim that this “would be offset by higher pay and more rights at work.” It seems dubiously optimistic to expect that falling stock prices resulting from decreased profitability will lead to increased wages.
The Anti-Corruption and Public Integrity Act contains a number of measures designed to limit the influence of money in Washington and to restore the faith of the American people in their elected officials. This bill’s provisions include a lifetime ban on lobbying for the president, vice president, cabinet members, and lawmakers, and bans of between two and six years for other federal workers. Additionally, presidential and vice-presidential candidates would be required to release eight years of tax returns while congressional candidates would be required to release two years of returns. Tax returns would also have to be released during every year of office. Members of all three branches of government would be prevented from owning individual stocks and would instead be given the option of "conflict-free investment opportunities for federal officials with new investment accounts.”
Neither of these bills has high prospects of becoming law in the current Congress, with even many Democrats being wary of the proposals. However, with Elizabeth Warren serving as one of the thought leaders of the Democratic party, these bills indicate the direction that the party is going. While elements of this legislation may sound noble on the surface, serious consideration must be given to unintended consequences. Especially of the Accountable Capitalism Act, such as stagnation of the economy through the stifling of America’s most innovative companies, and the precedent that the "workers" ought to control the means of production. As Samuel Hammond of National Review stated, “Warren’s proposal is to fundamentally upend the way the most productive companies in the American economy work from the top down.” While Warren may have recently claimed to be “capitalist to my bones,” the ideas which she is proposing are indeed socialist\communist in nature.
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